winds and fiscal cliff and stuff like that, you're being caution right here? >> a little overdone to the upside. from those who talk to the technical side, a little more room to the upside but this kind of momentum to the upside scares a trader like me. a little bit nervous we can hold on to this kind of movement so i would not be surprised to see us come off a little bit tomorrow. >> so what is the thinking right now after last night's vote? is it about the tax bill last night, or is something else going on here? >> this was the relief rally that that mess was finally over, and we never have to say fiscal cliff again. >> from your lips, right? we can only hope. thanks, ben. see you later. we are going out, and we are very close to a 300-point gain, the best gain for the market in about four or five years with the dow up 296 points as we head towards the second hour. got wilbur ross joining us and more members of congress as well. stay tuned.

nearly a 300-point day on the dow jones industrial average. welcome to the "closing bell." i'm kelly evans in for maria bartiromo. bill griffith joins us here in just a second. stocks are kicking off 2013 with one of the biggest rallies we've seen in some time. the biggest, in fact, since 2009. here's a quick look at how we're finishing the day on wall street, waiting for the settle to come through to see if we can hit the three handle on the dow jones industrial average, but we won't be far away from it, regardless. the nasdaq is adding about 88 points, the s&p 500 and, bill, the bottom line, up anywhere from 2.4% to 3% for these averages. >> i'm looking at the board here in the new york stock exchange, and it shows we're up 308 points right now, so we may be seeing a tremendous amount of buying coming in at this moment, and we saw evidence of that early on, and some of the technology may be playing catchup right now. >> you've been pointing this out for the last couple of hours just how lop sided this trade really is. >> the buy imbalance was very

strong to the upside, and so here we are finishing about the highs for the day with a gain of 2.35%, and that's not even the best performer of the day. >> right. >> because the nasdaq is up 3%. >> wow. 3.07% is the latest that we're seeing. as you said, as we continue to process all these trades, the strength is, you know, apparent. >> let's break this down with some pros and get their views of this. michael farr from fax miller and washington and michael pento from pento portfolio strategies back with you, and any chan from chase wealth management and our own rick santelli as well. anthony chan, you bothered to come here. we'll ask you first. what do you make of this first day rally? one-day wonder or the beginning of a new trend? >> i really don't think it's a one-day wonder. i think the economic trends are improving, the left tail risk is off the table, not that there's no more worries so whether it's the sequester or debt ceiling, these are problems that are going to be in front of us, but i think it's encouraging, and i'm pretty encouraged by what i

saw. >> even with the strength of the buying figures here, that doesn't give you any reason to pause, to say we look at these levels and this is your classic point to sell? >> kelly, every time you see a jump of this magnitude, you're going to see some sort of a correction of some type, but the big question 2013 as a whole, are we going to make progress or have seth backs and my prediction is more progress than setbacks. >> michael pento you said were you buying into this real. how much higher do you think it will go? >> we have about 45 days before we hit the fiscal canyon. the world is dominated by keynesian counterfeiters, shinzo abe grabs the boj and says print 1 million yen and over to europe mario draghi says he'll do whatever it takes to make sure bond yields never rise and greece, the stock exchange is up 33%. and ben bernanke says he's going to keep printing $1 trillion every year until the

unemployment rate drops to 6.5% which will never happen unless everybody drops out of workforce so you have to go long here and you have 45 days of cover until we hit the fiscal canyon but they kick that or punt that one down the field again, and we'll have a pretty good year in nominal terms. >> okay. watch out, middle class though. don't go fill up your gas tank. >> michael farr, 45 days, do you agree or jump on here and say you don't fight the fed or don't fight any of these central banks. >> you don't fight the fed, you don't fight the central banks, and i think a shameful result for congress, a shameful result for america in the fiscal cliff that's turned into a fiscal farce, but i think it has all of the sign posts as to a very strong market. because, look, basically you -- the middle class and 99% of americans now know what their future tax rate's going to be and kind of know what the world

is going to look like for them. they can spend, and have a sense of certainty and can see a bit into the future, but they don't know -- >> michael farr, they don't know what their real income will be. >> we know -- guys, we know we'll have another two months fighting on the same issues. the only thing -- we get maybe a week of certainty out of this. >> there haven't been great government cuts. americans at citizens now, as consumers, can project a bit of their cost structure better now than they have been able to before, and so it seems with all of this still plus they are going to continue to have $1 trillion in debt spending, deficit spending. i mean, it's absolutely shameful what they have done. they kind of put in the penalties, but they are going to keep the cash available, so i see stocks looking strong just as if the fed had come out. this is a fiscal ease. >> rick santelli, monster real for equities, but the selloff in bonds, treasuries, was modest compared to the buying we saw in stocks. what do you make of that? >> it was open up eight basis points higher, and it's been

glued basically to 183, 184 ever since. i think personally there's a lesson to be learned by that. i think that the fixed income market may have higher rates, but i think that that may be a bit overzealous to think that they are going to be significantly high. i mean, we're up 308. all is fixed in the world. the president is somewhere in hawaii yelling four and the cbo is yelling 4 trillion more, and warren buffett's secretary still going to pay higher taxes than warren buffett, but everything is good in the world. >> hey, i've got a great idea. let's borrow trillions of dollars and make sure interest rates are zero percent and everything is going to be great. wait, didn't we try this also, and didn't it end in complete disaster? why do we expect something different this time? >> i'm not sure that you can argue that if you go back and look at what's been happening the last couple of years it's quite clear that in 2009 people were arguing that we were never going to be able to climb out of this fiscal expansion, monetary expansion. those have been the two important levers that have led

us here. >> but we haven't de-leveraged as an economy. >> yes, we're de-leveraging, allows the de-leveraging to take place. >> we are in fact de-leveraging. if you look at all the money that's been paid back by consumers, whether it's voluntary or involuntary, we've seen a lot of de-leveraging, but it's not just what the governments are doing. >> wrong, sir. >> a lot of good things. consumer confidence on a daily basis is hovering at one of the highest level in five years and now with the extra uncertainty removed off the table, i think business kez start to take some of the cash off. >> the government is continuing to leverage. >> total non-financial accident 250% of gdp, hasn't changed since 2007, so, no, we have not de-leveraged as an economy because the government debt is our debt. >> michael, the point thoug then becomes that being the case, that stock of debt is still sitting so high, what's the best way to reduce it and, unfortunately, the best way to reduce that. >> austerity. >> austerity that doesn't harm growth prospects in the meantime. that is the holy grail for not

just the u.s. but for any major economy. >> where is this magic elixir going to come from. there has to be some pain. where have we become so arrogance and have so much hubris to believe we can't have a recession anymore? >> and we've got to be willing to elect people who will take the necessary steps so that our grandchildren don't get these bills. bob coaching was right. >> that boat's already sailed. >> if you want to talk about why greece's debt to gdp went from 120 to 100, it had a lot to do with their five-year recession. >> exactly. >> and they had the same debate in greece. >> and they also used the euro to borrow a tremendous amount of money using the german balance sheet and we're doing the same thing, abusing our world's reserve currency status, and when that ends, it's going to be very painful. >> the music hasn't stopped. the cash is still flowing so markets will go higher. >> you're right. >> all right. we've got to go at this point. i'm not sure we solved anything, but it was fun somehow.

>> we did better than congress. >> that's true. >> at least we didn't curse. >> no f-bombs here at least. see you later. stocks kick off the year on a high note thanks in last part to last night's 11th-hour tax deal in congress. checking with bertha coombs for today's leaders and laggards. >> bill, a day for notable milestones. the dow starting the year up over 2% for only the tenth time in 100 years, the nasdaq's best one-day gain in over 15 months, the s&p starting the year with a sizable gain for the fifth straight year. that's never happened and the russell 2000 hitting a new all-time high. zipcar was the russell's biggest percentage gainer on a $500 million cash deal to be acquired by avis which today hit a five-year high on that deal. on the s&p, u.s. steel the biggest peersage gainer on an upgrade from credit suisse and metlife seeing big cliff relief rallies today. j.c. penney bucking the trend in new year starting the year with a bick bounce after losing 40%,

alexion and other biotechs rallying and consol energy and natural gas players among today's decliners with forecasts calling for warmer weather ahead. kohl's and other retailers lower after likely disappointing sales. and emc, disappointing fourth-quarter earnings, and continued pressure for watson phrma after the fda approved a generic version of its adhd drug. a lot of movement today, bill. >> ber, that thank you very much. >> sorry, we've been chatting here. >> bill is making an interesting point. got to look at strength within the market and pay attention to what signals we're seeing. >> and a very strong last few minutes of trading here for the bulls. >> anything to give pause, maybe

it's what happened with the euro, not exactly participating. >> exactly. a huge first day of the year msnbc what for the rest of the year? someone who studies these types of things joins us next? >> also, billionaire investor wilbur ross joins us. we'll find out if a tax deal is changing his investment outlook and just what his plans are now that there's some certainty on taxes. >> and if you haven't heard yet, apple reportedly working on another iphone. iphone 6 maybe. what's on tap for the latest incarnation and how crucial that rollout may be for the company's stock. that and much more when kelly and i come back on the "closing bell." change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses

to read and consider carefully before investing.

okay. welcome. if you're just joining us, that's what happened today, a pretty good rally. no since 2008 has the first trading day of the year been a loser for the dow. in fact, in the last 21 years, the dow has record gains in its first trading day of the year 15 times, and that includes today in a very, very big way. what does this first big day of trading in the new year mean for the markets the rest of the year? that's the question, right? >> yes, it is. to explore this, joining us now is market historian jeremy segal investor finance at the university of pennsylvania's wharton school. >> welcome back, jeremy.

>> professor, is there a way to isolate how much today's move is fiscal cliff-related and how much might be seasonal or fundamental effects? >> you know, the first day, as just mentioned, is often a good day but there's no -- there's no doubting the fact that the resolution of the fiscal cliff was a huge boost to today's market, and obviously the moving toward that was a huge boost for monday's market. if you combine monday with today, while we've had one of the biggest turn of the year gains in history. >> you have been calling for a rally anyway. i mean, you're among those who felt that this market was undervalued, underowned, however you want to characterize it. how much higher can we go, especially as we get closer to march and we're getting to that debt ceiling discussion that congress is going to have which probably is going to be pretty ugly. >> yeah. i'm not too worried about march. i was more worried about getting the fiscal cliff because if, you

know, nothing was done, we were hit with really high taxes everywhere. i just can't believe either the republicans or the democrats are going to stop government so that the social security checks cannot get printed up and sent to people. i think there's going to be a game of chicken, but at the end they are going to sign it. i don't think there's going to be a debt downgrade. you know, i didn't think that the downgrade of the s&p two years ago was real justified to begin with, so i'm not as worried about march. i -- i think this could be a 20% plus year for the dow and the s&p because i see that all the liquidity that the fed has produced, i think it's finally going to be flowing into the market, into the economy, into spending, and bonds, you know, which for a long time i've been saying, you know, interest rates are heading higher. i think this is the year where people finally say, hey, i can't hold my bond fund anymore.

>> i want to ask you about one other seasonal effect we've started to see in the last couple of years and that is stocks and other asset classes like oil tend to do well in the first part of the year. i wonder if there's a reason behind that, if you expect that this time around. when you add into that the fact that we will sort of again through the mid-spring period be dealing again with the debt ceili ceiling. >> well, you know, what's interesting is we've seen a real high correlation in recent years between oil and the stock market. generally when people are more optimistic about what growth is going to be, there's more economic activity and when they get pessimistic it goes down. real, what we see in oil is really a reflection of what we see in the economy, and as you know the last few years, the beginning of the year has been good, and then we've hit trouble in the middle of the year. i think that's why we've seen that in oil. that's where your basic correlation is coming from. >> professor, do you expect to see that kind of seasonal pattern play out again, and any idea as to why it's been so

predominant the last couple of years? >> there's a lot of theories out. some has to do with the seasonal adjustment of the great recession that we had four years ago. i think this year because of the fact that we do have some tax hikes for the first quarter, a little bit of slow necessary, but i think in contrast to the last two years we're going to see an acceleration of the economy in the second half which probably drives oil and stock prices higher. >> would you buy gold here, jeremy? >> i think gold is too high. honestly, that's either for those who think there's going to be hyper inflation or a financial collapse. i mean, that's when you want to buy gold. >> you don't see either of those? >> i don't think either of those are going to come true this year so my feeling is we'll get disappointing returns in gold this year. >> but a 20% gain in stocks for 2013, that's the forecast from professor jeremy segal at wharton. happy new year. >> thank you very much. >> apple shares are spiking near

a one-month high, but question is whether the company can succumb to yeah it if its next generation iphone is a dead? >> will it wow techheads. >> have they have come out with a dud for an iphone? >> maybe this time. this time is different. dangerous words in finance. >> up next, how will the tax deal affect billionaire investor wilbur ross' wheeling and dealing this year. he speaks with us exclusively on the other side of this break coming up. >> have you heard certain deductions will phase out thanks to the tax deal. our own eamon javers tells us what you need to know and how much more you might pay when we come back. going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade

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ally bank. your money needs an ally. well, it was quite the day in the markets with an over 80% of the s&p 500 rising above their 50-day moving averages, bill. >> is it pedal to the metal tomorrow? we want so much, bob pisani. what do you think? >> oh, brother. listen, i'll tell you. if the retail trader, if you get the big headline, stock's up, fiscal cliff deal and the public starts believing it a little bit, then, yes, we could see something really start building here. remember, first trading day, 70% of the time the s&p in the month of january follows what happens on the first trading day. that actually is one that's worked fairly well. let she tell you what's been going on, folks. had a great day. closed at the highs. heavy volume and it never flagged no. selling into the real, and a lot of people thought there would be. maybe tomorrow, but we didn't

see that today of the historic highs. put it up here. the russell 2000, can you buy that and at s&p mid-cap. we're three point away from a five-year high on the s&p 500. how about tech stocks? we were up right across the board, folks. almost 10-1 advancing to declining stocks. tech had a big day and dell here in the hardware. also had some of the other stocks that were up in that group like juniper and the networking group. builders and home builders were all great shape. owens corning, a new high. masako is a new high. not quite high for the new home builders, but they were all strong as well. we did have some laggards though. the important thing, just show you, the hbo's lagged a little bit and concern about medicare cuts down the road and retailer stocks lower. higher payroll taxes impacting discretionary spending. finally, guys, five years in a row, up on the first trading day of the year, and i think that is also a factor in addition to the fiscal cliff deal. guys, back to you. >> yeah. up in a big way. bob pisani, thank you very much, sir. markets may be buying into the deal out of washington.

billionaire investor wilbur ross not so much. >> yeah. he says the bill passed by congress last night is mainly a ticket to another fight which we'll talk about, but how does all of this affect his investment decisions for 2013? wilbur joins us now. good to see you. welcome back, sir. >> good to be back, thank you. >> are you encouraged or dismayed by the bill passed last night? >> well, i'm encouraged in one sense in that at least the vast majority of american taxpayers will know what their rates will be, and there's not that much of an increase. for most people the increase will be basically the two percentage points on social security and a little witt higher limit, so from the average person's point of view, that's okay. the disappointing part is that it didn't really deal with spending. there's a ratio of $41 of tax increase to $1 of spending

decrease. >> right. >> that's not kind of balance we need to fix the budget. >> wilbur, though -- >> we have to wait and hope. >> the fiscal cliff wasn't about the deficit. it wasn't about the debt. it was actually about stabilizing gdp. i mean, that's the cliff, that's about making sure we wouldn't be thrown no a recession as these various measures went into effect, so from that point view, it's a very different kind of deal that we were expecting or looking for than one that dealt directly with taxes and spending. >> well, we do need to deal with the deficits. we can't keep running trillion plus dollar a year deficits indefinitely because otherwise you'll have the federal reserve balance sheet be miles bigger than the whole economy, and obviously that's not a comprehensible thing, so we really do have to deal with the spending side as well. and most of the measures that would have been dealt with in the spending, like gradually raising the age on social

security with have no negative impact on the economyner team in any event. >> by the way, what do you think of today's rally, and it comes, you know, after a pretty good month of december anyway. are we fooling ourselves to see stocks go much higher here when we still have the spending part of the equation to be figured out in the next few month, or is this wall street looking past all of that and guessing that the economy will grow from here? >> well, i think there was so much anxiety built up over the cliff that almost any resolution of it would have brought a sigh of relief. also remember, this is the first part of january. a lot of institutions have an influx of new money that needs to be put to work, so i don't think this is a determinative thing one way or another, but certainly from the point of view of the economy it's much better for the market to be acting well than poorly. >> it does point towards maybe

revived growth, prospects that bill was just talking about, but the question remains there's two more months to which could potentially be a nastier fight over the debt ceiling. how worried are you? >> well, i'm less worried about the fight over the debt ceiling than the fight over the sequester. remember, all they did is they pushed the skywestering forward two months. >> right. >> i'd be very surprised if the congress would vote to default on the u.s. sovereign debt. i'd be a lot less surprised if they let the sequester come in. >> well, what is this dysfunctional congress of ours capable of when it comes to spending cuts? mean, we had just a couple of congressmen here, pretty moderate on the republican and democratic side, and they couldn't agree. they couldn't even come close to an agreement on how the spending cuts were going to play out in the next couple of months here. what are your expectations? >> they are not going to know anything more about the arithmetic of spending in two

months than they do already. it's just that people don't like to make painful decisions, but as i say, things like changing the inflation measurement, things like gradually extending the social security capability age, things like means testing, i don't really see why those should be very controversial on either party's side, so for the life of me it's unclear why it's so hard to come to grips with those. >> yeah. where are you going to make money this year? >> god only knows. it's too early to tell. we're pretty liquid right now. >> well, you look for distressed asset. that's where you've made your fortune. where do you see that happening right now? what looks attractive to you? >> well, seriously, we continue to be big advocates of shale gas, and if we're talking about the economy, a very easy way for the administration to boost the economy would be to grant the

export permits for the 12 or 13 pending lngx-4 terminals, and to make it clear that it's going to be supportive of shale gas. shale gas could transform the whole economy, get us back into the chemical business, get us back into the plastic business, reduce our balance of payments deficit and all without costing the fact a penny, and meanwhile while reducing the carbon dioxide footprint by substituting natural gas for coal. so i think it's a win-win, and, again, it's a mystery to me why there hasn't been more overt support of it. every day that we waste granting another permit for lng export is a day that we'll never recapture. >> and we'll leave it there. >> always good to see you, wilbur. happy new year. >> happy new year to you folks. >> well, is it here we go again?

congress has two months to raise the debt ceiling or else the treasury department runs out of money to pay its bill and we risk default. how much one congressman is willing to push spending cuts before we hit the debt ceiling deadline. >> reading the fine print and getting ready to pay the higher taxes. eamon javers tells us whose deductions will be phased out as a result of last night's tax deal. you can't miss that. >> plus. >> there's only one group to blame for the continued suffering of these victims, the house majority and the speaker. >> new jersey governor chris christie crying fowl after putting off a vote for hurricane sandy victims. more on that when we return.

deal. more on that when we return.

as we all know, last night's fiscal cliff deal was essentially a tax deal. part two is to come now as we set the stage for a new fight on the debt ceiling. we've already really hit the maximum amount the government can borrow giving congress about two months now to raise that ceiling or risk default. last year the fight was brutal.

as we all remember, and it led to a u.s. credit downgrade. >> yes, and the president has already said, quote, i will not have another debate with this congress over whether or not they should pay the bills they have already racked up. republicans say they won't consider raising the ceiling again without spending cuts, and on that note joining us now is representative david schweiker, republican from arizona. he voted against last night's deal. representative, welcome. >> hi, kelly. hi, bill. >> as we turn our attention towards the debt ceiling in two month's time, how far are you willing to go to get spending cuts? will you risk a debt default? >> well, first off what, we need to work on our language here. using the word default i think is actually quite a misnomer. we have enough cash flow to cover our bonded indebtedness and actually the vast majority of our entitlement obligations. if you went over and you ran out of borrowing authority, a lot of ugly things happen, but you do not have a default. >> right. >> so we -- we have enough pay

to interest, but, i mean, we get that point. we understand what you're saying there. >> but my reason for that is it misshapes the debate here. look, we're in a really ugly shape here. >> all right. >> if you look at both the deal last night and where we'll be by the end of this decade, we're going to be drowning, drowning in debt. >> right. >> and yet we keep pushing off the hard decisions, and many -- >> how far -- >> in many ways the television, the debates here, we scare the public out of being willing to have a stiff back and say let's do what's tough. >> but it is an important issue, and to the spirit of kelley's question, the first question, how far are you willing to go to see these spending cuts in order to get the debt ceiling lifted? >> i am incredibly concerned that the debt markets are going to wake up one morning and begin to punish us, and when that happens god forbid what happens

when you consider we're floating, what, 12 trillion of publicly floated debt, 105% of debt to gdp in total debt. just a small spanking from the debt markets, it's a disaster. we need to convince those markets that we're taking this seriously. i am someone who will not vote to raise the debt ceiling unless there's a credible change, particularly in future entitlement spending. if we get, that i'll vote to raise the debt ceiling. >> we should point out that s&p is now out saying the fiscal cliff deal as it stands right now will not affect the u.s. outlook. pretty much same thing moody's said too. >> congressman, you're talking about scaring the american people and the rhetoric you're used to go talk about this potential debt situation is inflammatory. it's not something we're seeing in markets today. if anything, markets, the stock market was worried about the impact to grow from any deal and that will continue to be a concern going forward. >> kweli, just as you had wilbur on a couple of moments ago. do you want elected officials

like myself to come on the air and tell you the truth? look at the math. we need to deal with this, and if we soft pedal it, if we walk away from the tough decisions because it's easier, because we're scared of what reporters or our media or even our voters will say, we need to tell the public the truth. >> congressman -- >> this is unsustainable where you're going. >> you're right that the concern is the long-term unsustainability of the current path but the concern is by doing something now to fix that problem we throw the u.s. into a recession so if you're saying we're not going to default on the government debt payments but could risk a government shutdown that will impact growth in the near term. >> but you can't make the market and say that throws you instantly into a recession. the fact of the matter if we demonstrate and can put together a credible debt deal that starts to bend the debt curve i believe the equity markets and the long-term fixed forecast markets will treat us very kindly like that. if we did what we did a year envelope, moody, s&p,

substantially spanked us because we did not seem to deal with how we would deal with the debt in the future. >> it did not seem to matter. >> when you have the federal reserve buying half your sovereign debt. >> right. >> you have a completely art official market right now. >> let me ask you on the spending side. would you favor sequestration, just let it go and have those draconian cuts? is that the amount of cutting that you want to see in order to allow the debt ceiling to be raised? >> william, think about what you just said. draconian cuts. the fact of the matter is the cuts in the sequestration are ugly. the only thing that's uglier is not doing it. we have to start bending the debt curve. >> is that a yes, sir? >> oh, of course, and i was pretty clear in that. you let it -- i would -- there's better ways to do it, but it's better than not doing it. >> congressman, real quickly. what would it take for to you agree to the geithner proposal, to give the president the authority himself to raise the debt ceiling?

what kind of spending cuts would have to be included in a grand agreement for to you get on board with that, if you would? >> yeah, i doubt i would ever agree to such a thing. it's not spending cuts. it's reshaping the way future entitlements are delivered because that's what consumes every dollar in our general fund in the future. >> sir, i hear you. we certainly hope that it's not as ugly as it was in august of '11 on this debt ceiling debate. >> but we need to toughen up. look, for those folks watching the vix and the market, this is what 2013 is about. we'll have continuing resolutions because we can't get the senate to do a budget. you know, we're going have the debt ceiling. we have pushed off our responsibility for decades. the roosters have come home to roost. >> all right. good to see you, congressman. thank you much for joining us. see you later. new jersey's republican governor has called out gop leaders in the house for failing to call a

vote on aid for victims of superstorm sandy, and his words have already prompted action. brian schactman has the latest details for us. >> you know, when chris christie talks, turns out, washington listens. last night when all was said and done on the fiscal cliff, the house adjourned without addressing relief money for superstorm sandy. this absolutely enraged pligtss in the northeast, especially that man peter king from new york and others from new jersey, areas still dealing with the storm that destroyed whole communities in late october. you may recall governor christie stood with president obama after the disaster, and some thought that was a political move. withholding the aid was perhaps another political move but either way christie didn't hesitate to point a finger earlier today. >> there's only one group to blame for the continued suffering of these innocent victims. the house majority and their speaker, john boehner. >> reporter: but 90 minutes later new york representative said two votes for funding are forthcoming, one on friday for 9 billion in flood insurance and

one in two weeks on another 51 billion. >> whatever reason the speaker decided not to bring it to a vote this week, obviously we disagreed were that and that's in the past. the bottom line is between friday morning and january 15th, those two votes, will bring in $60 billion that's absolutely necessary for new york, new jersey and connecticut. >> king obviously softening his tone from earlier. clearly some reversal, guys, based on republican reaction to something the republican house speaker could have handled. bill, back to you. >> all right, brian. thank you very much. well, those things, we know that's certain in life, death, taxes and another sequel of a batman movie. another one. our tax code remains far from clear. wait until you hear how much more you could be paying the tax man thanks to the phase out of some deductions embedded in the tax deal that congress just passed. that's coming up next. >> also ahead, our wealth editor robert frank told us who won in the 11th hour tax deal. back after this.

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well, based on today's rally, investors love the tax deal to avert fiscal cliff, but more details are emerging. part of the deal reinstates the phase out of personal exemptions and deductions for singles who earn more than $250,000 and for couples making over $300,000. so what exactly does this mean for your bottom line? eamon javers has been doing the math on the back of the envelope. eamon? >> reporter: hi, bill.

well, let's talk about two of the hidden tax increases in this deal it a are going to hit people who make over $250,000. limits on deductions and limits on personal exemptions. there's something called a personal exemption phase out in this law which limits your ability to take tax exemptions such as your kids. those are almost entirely phased out by $500,000 worth of income, and then there's something known as pease which is named after the congressman who invented it, a cap on your deductions for over 250,000, so that they don't have so many deductions they escape tax liability all together. if you make $300,000 a year, you're 50,000 over the threshold and a formula is applied to all of the deductions. in this case you have to subtract about 1,500 bucks off your itemized deduction tote a. that's an across-the-board haircut on deductions so it's going to impact everything you typically deduct, like your

mortgage or charitable giving or anything. both of these new taxes hit people well below the much publicized $450,000 limit. that's going to surprise some taxpayers come next year, bill. >> once again, another bill that is a tax accountant employment act. >> absolutely. >> right? >> financial planners, too. >> thanks for understanding pease. >> p-ase be with you. >> if you generate income off your investments, how did you do in this tax deal? our wealth editor robert franks says actually not bad. hi, robert. >> hey, kelly, not bad at all. indeed, the wealthy will see their taxes go up under this cliff deal but not as much as many had feared, especially for investors. let's take a look. we expected that top rate would go to 39.6% from 35%, and, of course, it did, but only for those making $400,000 or more or families making $450,000 or more. now, those folks will see their taxes go up an average of about

$20,000. those making more than $1 million a year, they will see their taxes go up by about $120,000. now, that's an average. for people who make more of their money from investments, tax rates will remain much lower. taxes on capital gains, only went to 20% from 15%, but the biggest winner in this fiscal cliff deal were the wealthy investors who make their income from dividends. obama proposed taxing dividends at 39.6%. the current rate is 15%. it didn't happen. it only went to 20% so despite all the talk about the buffet rule and the investors playing lower rates than the salaried rich investment income is taxed at half the rate as ordinary income as a result of this deal. last night's deal didn't solve any issues but it made one thing perfectly clear, the tax system still rewards investments and those who make their money from

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shares of apple up more than 3% today. helped in part by reports that the tech giant is testing yet another new iphone. that news website, the next web, says that app developers found references to it but there aren't any clues about new hardware or soft features yet. >> and so we asked the question, what will it mean if these talks turn out to be true. is that a reason to buy the stock? brian white already has his 12-month price target of $1,111 and says a new iphone could help apple further expand its market share in smartstones. so, does that change your price target, brian, or mean that we might actually get there? >> yeah, so, it doesn't change our price target but what it does do, and, you know, we put out a note this morning, really highlighting why we think the next iphone will be very

different. and the two factors we highlighted is number one, color. bringing potentially eight different colors to the iphone and form factor. making different sizes available for the iphone, which we really haven't had for the same model. so, with iphone 5, we have a four-inch and that's it. >> okay, there's james brim of come pass intelligence, he doesn't think this is a reason to buy the stock. you think it's overpriced. you made that clear in the past, right? >> yeah, i have. i think he's right that they do need to get different colors and form factors in there. i've talked about that before with you, bill, that they do need to have different form factors out there. but this is just another e vice and how fast you can push your buyers to buy another new product again? we're nearing that saturation point of smartphones in the u.s. over 50% of people that have a phone have a smart phone. so, you know, how often can you get them to churn that device? they need to do things outside of just the iphone.

they need to do a lot of different innovative things. >> what do you think? >> well, what i think this will do for apple is that coming out with different size screens will offer different price points. different price points will allow apple to start to penetrate the lower end of the market and the very high end that doesn't exist today. so, for example, i go to china quite a bit and there's a big piece of the market that apple is missing because they don't have something maybe like an iphone mini or a smaller, cheaper type iphone. >> when the ipad mini came out, they didn't price it at the low end. they stayed high end at that point. >> so it will be cheaper priced but not cheap priced. >> apple priced. >> yes. >> still have a premium. >> james? >> bill, one of the things that the chinese market wants, they crave things that are cutting edge, as well. and the iphone, quite frankly, the hardware inside it is not cutting edge. they need to jump ahead and do

some of the things that other companies are doing that have leapfrogged them. otherwise, they relegate themselves to the same things that happened to nokia and rim. >> but what -- >> you can't be a one-trick pony. >> what does a masz market device mean for market ability? >> if apple is just gain one percentage point in the smartphone market, that's 9 million units and that's about $2 in earnings. so, if you look at apple today, maybe they will end up this year, 17%, 18% market share in smartphones -- >> but to james' point, eventually, you're playing the commodities game when you play in the smartphone business. so, to maintain margins and to justify the higher apple price, you got to be cutting edge. is there that much left in the cutting edge technology for apple to pursue here? >> i think, look at the pc market and how apple prices themselves at a big premium and look at the market share gains we've seen over the past five years. it's been pretty phenomenal. >> but you think that translates

into something more mass oriented like a smartphone business? >> i think it exactly does. the apple ecosystem, there's nothing like it on the planet. the quality of the hardware and the software and how everything connects. and if you can start to offer something at a price point that's more attractive to some of these developing countries, i think you're really going to expand your market share. really, the only competitor out there i see out there is samsung. >> all right. >> and the ipad mini is on fire in china. >> you don't think i should hold out for the blackberry 10? >> we're going to be the last people on earth with one of these. >> and our senior producer over there, too. thank you, gentlemen. happy new year. >> thanks, happy new year. >> happy new year. it was a happy new year on wall street. the dow and nasdaq posting their biggest gains in half a year. >> will stocks keep flying hike tomorrow morning or come crashing down from a bad hangover? two of the streets top money pros will weigh in, coming up pros will weigh in, coming up next.

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street wealth mansion m and richard dixon from lowry research corporation. brian, 30 seconds. what do you expect tomorrow? >> i expect a rally. first, you need fuel. the new york stock exchange stocks combined are about $16 trillion. bull there's $23 trillion on the sidelines and in treasury debt earning less than 1%. secondly, you need value. the average stock in the funds that i manage has a 7% profit margin with double digit growth predicted for five years. finally, you need greed. averting the fiscal cliff was probably that spark that will get people back into the markets. >> all right. >> didn't need 30 seconds. richard, break it down for us. >> hi, kelly and bill. we try to avoid stepping in front of speeding buses and the upside momentum and demand over the past couple of days has been speeding right along. in addition, the seasonal bias is to the upside. since 1971, the second trading day of the year, it's been up 75% of the time, after the first trading day has b